blogging on issues relevant to a B-school business law course

The Volkswagen Scandal

Posted by Mary Bonatakis.

As the Volkswagen case unwinds it is causing many debates. Volkswagen is currently being charged with selling 11 million diesel vehicles equipped with software to cheat test put in place to limit the emission of gasses that are harmful to our earth. After this information was released over 350 lawsuits have been filed against Volkswagen. With a case this large the first major debate is where this trial should take place. It has been decided that these cases should all be heard in the same location.

The venue of the hearing is a very important part of the case. Many lawyers have different suggestions as to where this case should be heard. Charles S. Zimmerman a lawyer in Minneapolis believes the case should be heard in Detroit because it is considered “Motor City”, Benjamin Galdston, a San Diego lawyer believes the case should take place in Los Angeles because many other Volkswagen lawsuits have taken place there, while Warren Burns, a lawyer in Dallas believes the case should be held in Alexandria Virginia because the carmaker’s United States headquarters is nearby. The final decision as to where the case should take place is still undecided.

Once the location is chosen the judge will appoint the lawyers to represent the plaintiffs. This approach has been used many times in the past in big cases such as in automotive or drug cases. This approach concerns legal scholars because one group of lawyers can dominate the case and the lawyers will benefit more from the case then the clients. “One recent study found that about two dozen firms played leading roles in 10 or more major lawsuits. Five of those firms spearheaded 20 or more” (Meier). Firms like this are considered “repeat players” and have been earning the most money from their fees. Many people believe having firms like these take on the cases will create an unfavorable environment for plaintiffs.

Volkswagen released that they have put aside 7.3 billion dollars to handle the scandal. This money will not only be used to handle these cases, but also actions from regulators and the state attorneys general. In the law suits filed the common argument is that Volkswagen lied to them with false information about the cars performance. The plaintiffs are asking to be reimbursed for the premium prices of the car and to take the cars back. With this much money at stake it is driving lawyers to want to be involved in this case.

Large cases like this are very hard to handle. With over 7 billion dollars on the line lawyers have more room to take use the case to their advantage and make a large profit off their clients. In a Johnson & Johnson case in 2013 involving a flawed artificial hip, any client who chose not to hire their own lawyer and use one appointed by the court were forced to forfeit 29% of their reward to payout the lawyer appointed to them. The payout was approximately 50,000 dollars. Past cases like the Johnson & Johnson case are leading scholars to question the motive behind lawyers to get involved in this case. Everyone involved in this case is working towards making it as fair as possible. Once everything is taken into account with input from scholars the final decisions of the location of the case and the lawyers representing the clients will be chosen, until then the debate and fight to be a part of this case will continue.

Mary is an accounting and information technology major at the Stillman School of Business, Seton Hall University, Class of 2018.